IRS Chief Warns of Possible Tax-Refund Delays

The coming tax-filing season could be the most complicated ever for the Internal Revenue Service, IRS Commissioner John Koskinen said in an interview with the nonprofit publisher Tax Analysts that was published this week.

Congress has yet to reinstate dozens of tax provisions that expired at the beginning of 2014, he noted. In past years, late action by Congress on such provisions created problems for the IRS and sometimes delays that affected taxpayers. Moreover, “the difference this year compared to the past is we are having to implement the Affordable Care Act and Fatca,” he said. Fatca is the Foreign Account Tax Compliance Act, passed in 2010, which aims to curb offshore-account abuses; its major provisions took effect this year.

In the letter, Mr. Koskinen said the uncertainty over the expired provisions, “if it persists into December or later, could force the IRS to postpone the opening of the 2015 filing season and delay the processing of tax refunds for millions of taxpayers.”

Worst of all, the commissioner wrote, would be for Congress to wait until 2015 to enact changes retroactive to January 2014. Such a delay could cause “service disruptions, millions of taxpayers needing to file amended returns, and substantially delayed refunds,” he said.

In a statement about the letter, Sen. Wyden agreed with Mr. Koskinen that Congress should move decisively to restore the provisions. However, Congress is not expected to address the extenders until after the election next month.

The provisions important to individuals that expired at the beginning of this year include a deduction for state and local sales taxes; a tax exemption for the forgiveness of mortgage debt; a tuition deduction; an enhanced break for transit commuters; and—especially—the individual retirement account charitable rollover, which allows people 70 l/2 and older to make tax-free donations of IRA assets to charity.